Global Perspective: Analysis On The Trend Of Domestic And Foreign Cotton Market

 

In addition, the weather is also the focus of speculation in the second quarter. The weather in Texas, the main cotton producing area of the United States, has not eased this year, which also makes the price of American cotton relatively strong. In the Indian market, the current cotton listing volume is far less than expected, and the final cotton output may be significantly lower than the previous forecasts of various institutions, so the Indian market price continues to record high.

The domestic demand for cotton is already weak, coupled with the serious blockade situation in various parts of the epidemic, it seems difficult to improve the downstream demand in the second quarter. However, it is also necessary to see that the current domestic and foreign price gap has been greatly reduced, and the cost advantage of India and Southeast Asian countries is no longer obvious. If this situation continues, the quantity of cotton yarn imported by China will gradually decline, China's textile enterprises with complete industrial chain and rapid response and other advantages, the final order situation will gradually improve.

Therefore, there are both pessimistic factors and potential positive factors on the consumer side in the second quarter. Whether the positive factors can be sustained depends on how the internal and external price differentials change. On the supply side, the commercial inventory in the old year was high, and cotton seemed to be in good demand. However, under the background of the sharp decline of national reserve inventory and the continuous digestion of commercial inventory, it is also a question that traders' mentality can keep rationality.

Therefore, although the second quarter seems to be sufficient supply, weak demand difficult to change, but in fact, in addition to the international situation is uncertain, the cotton industry itself also has some hidden beneficial factors. Based on the above factors, we believe that the price of cotton in the second quarter is easy to rise but difficult to fall. Of course, the progress of the Federal Reserve's interest rate increase in the second quarter is expected to accelerate. Once the crude oil price drops in Russia and Ukraine, commodities are faced with the risk of falling, and cotton prices will also follow the decline of commodities. Therefore, the trend of cotton in the second quarter may be more affected by the external environment.

High inflation superimposes war, and macro expectations change. The domestic market demand side is relatively empty, the supply side of the current situation of food supply problems, food prices soar, the phenomenon of grain and cotton land competition may bring variables to the cotton supply side. In the short and medium term, the grain price is strong, and the final cotton planting area growth may not be as expected. In addition, due to the drought in the main cotton producing areas of the United States and the large proportion of non price contracts, it is expected that the cotton prices at home and abroad are easy to rise but difficult to fall in the short term. There is still room for imagination to rise, so we can consider building more orders at low prices, and there is greater pressure near the cost line of several ginning plants above. Cotton yarn price trend to follow the trend of raw material prices.